Definition of Distributive Trade

This is also known as chain of distribution. It refers to the various stages or channels through which finished goods are moved from the manufacturers or producers to the final consumers. The channel of distribution is the path through which goods move from the producer or manufacturer to the final consumers. The channel is the path through which the ownership of products is transferred as it moves from the producer to the final consumers.

The chain of distribution can be demonstrated by the following diagram.

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Process of Distribution

The process of distribution of goods involves all human and physical means which aid the smooth transfer of such goods from the manufacturer to the final consumers. The process of distribution involves the following:

  1. Middlemen: The middlemen or agents are the human elements involved in the distribution of goods from the manufacturer to the final consumers. The middlemen are the wholesalers and retailers.
  2. Transportation: This is the medium through which the finished goods are moved by air, land or by water from the manufacturer to the final consumers. The means or mediums of transportation are by aeroplanes, ship, cars, lorries, train, etc.
  3. Advertisement: Advertising is the process of creating awareness in the minds of the public about the existence of a product. Advertising may be used to stimulate demand so as to increase sales. Goods can be advertised by radio, television, newspaper, magazine, etc.
  4. Warehousing: Warehousing is a process which ensures that goods produced are stored until they are needed. Warehousing is an important aspect of trade aimed at seeing that there is a regular and steady supply of goods to consumers.

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